Leading Crowdfunding Industry Analyst Firm, Crowdfund Capital Advisors, States Now is the Time to Update the Regulation to Further Enable Capital Formation

Washington, DC – Recently the Securities and Exchange Commission (SEC) published a staff report on Regulation Crowdfunding (Reg CF), also known as Title III Crowdfunding.

The Commission, in the adopting rules, stated that the “staff will undertake to study and submit a research report to the Commission no later than three years following the effective date of Regulation Crowdfunding on the impact of the regulation on capital formation and investor protection.”

The report finds the size of market, while modest in comparison to the broader financial markets, is evolving and doing so without any material risk to investors. Crowdfund Capital Advisors (CCA) data and analysis were cited in 7 references throughout the report.

“The industry is evolving systematically and responsibly,” says CCA Principal Sherwood Neiss. “With the appropriate adjustments to the regulation we can further enable capital formation without risk to investors. The time is now for the SEC to act.”

Sherwood Neiss, Crowdfunding Capital Advisors, testifies at the SEC

The CCA data and references used by the SEC were attributed to analysis by CCA and published in VentureBeat as well as Crowdfund Insider. The data comes from CCA’s CCLEAR Database. CCLEAR is the leading Regulation Crowdfunding database that collects, cleans, aggregates and reports on all companies seeking funds via Regulation Crowdfunding as well as those doing parallel 506(c) offerings.

A 506(c) offering is an online accredited investor offering. A parallel offering allows an issuer to run two offerings side-by-side and group the accredited investors in one pool and the Reg CF investors in another. This type of offering is popular for issuers that seek to raise in excess of the $1.07M cap in Regulation Crowdfunding.

Issuers that seek to raise funds via Reg CF must file a Form C (a form filed by a company (issuer) with the SEC before starting to raise capital and discloses financial information for its current and prior fiscal years) as well as a Form C-U (a progress report that an issuer files that discloses total capital raised).

Data that the SEC does not collect in either of these disclosures includes information like industry, a breakdown on the cost of the offering, daily change in capital commitments, daily changes in investors and information on a company’s valuation.

CCLEAR collects all this missing data which allows for more detailed analysis of the market including which industries are most popular with the crowd, which regions of the country have the lowest/highest overall valuations, what industries the crowd is most interested in supporting, etc.

An entire section of the report titled “Cost to issuers of undertaking a crowdfunding offering” came directly from research CCA did with issuers successful with Regulation Crowdfunding.

A key finding from our research, which was highlighted in the report, was that “the total cost of creating a campaign page, issuer disclosures, film, and video, and hiring a marketing firm, a lawyer, and an accountant amounts to approximately 5.3% of the amount raised.”

This average was based on feedback from 81 issuers. “This amount is substantially less than what a typical issuer would incur in a Regulation D offering,” says CCA principal Sherwood Neiss “and is a key reason why more companies should be looking at Reg CF as an attractive pathway to raising funds.”

The report provides a detailed look at how Regulation Crowdfunding has performed through December, 2018. (For people interested in data through today’s date, you can find it on CCLEAR’s Daily Dashboard – see below for the latest data).

“Unlike opponents who said regulated crowdfunding would open the floodgates to fraud, we have yet to see fraud materialize,” says Neiss.

“This is because there are easier ways to defraud investors than to come up with an idea for a business, incorporate it under federal laws, convince a funding portal to list you, spend hundreds of hours and thousands of dollars trying to bring your friends, family and followers to the campaign page, and then hitting 100% of your funding target or the commitments get returned.

Add on top of this the hundreds of discerning eyes picking apart a campaign in the comments section. These types of ‘built-in investor protections don’t exist in other parts of the private capital markets.”

And increasing the limit on how much can be raised through crowdfunding from $1M to $5M.

CCA’s principals were interviewed and cited in the Treasury report. The Fed’s recommendations were a summary of CCA’s more detailed recommendations as requested.

“The industry is evolving systematically and responsibly,” ended Neiss. “With the appropriate adjustments to the regulation we can further enable capital formation without risk to investors. The time is now for the SEC to act.”

Google search “Robert Hoskins Crowdfunding PR” to see why Mr. Hoskins is considered one of the industry’s foremost crowdfunding experts that has amassed a huge social media following, which is dedicated to supporting donation-, rewards- and equity-based crowdfunding campaigns.

Overall, the Top 100 Crowdfunding Sites worldwide saw a growth rate of 255%. Not bad in a hyper-competitive market place. This demonstrates an impressive growth rate for the Crowdfunding industry, which is growing rapidly on a worldwide basis. Click here to see the Top 100 Crowdfunding Sites and their growth rates over the past 12 months according to SimilarWeb Statistics.

Sixteen of Top 100 Crowdfunding Websites Lose Traffic Due to Fierce Competition

And while most Crowdfunding sites grew, sixteen of top 100 crowdfunding sites saw significant website traffic decreases. This is the result of fierce competition and shows how difficult it can be for the crowdfunding leaders such as Kickstarter and Indiegogo to maintain their growth due to the onslaught of new competitors.

The cool thing about the SimilarWeb statistics that were used to build this report was the competitive information they provide for each crowdfunding website such as the top referring sites, sites that viewers went to next and the amount of traffic being generated by direct traffic, referral partners, search, social media, email and display advertising.

Crowdfunding sites at the bottom of the Top 100 Crowdfunding List can use this information to improve their marketing program’s performance and try to work their way to the top of the list.

SimilarWeb Traffic Sources for Kickstarter

Top 10 Crowdfunding Sites that Experienced Decreasing Website Traffic over the Last 12 Months

Fundable.com’sinfographic below details some great facts for people who are writing business plans and reporters looking for some great stats to quote for blogs, online media outlets and print/broadcast media. These numbers are going to grow as more and more people become aware of the booming crowdfunding industry.

This is just the beginning, but report reports, white paper and trade press articles continue to paint a rosy picture for the accelerated Crowdfunding industry growth rate that is predicted for the combined fundraising economic stimulus forecast for donation-based, equity-based and perks/rewards crowdfunding campaigns in 2014.

Fundable’s Crowdfunding Statistics predict that:

In 2014, Crowdfunding will add 270,000 jobs and inject $65,000,000,000 into the worldwide economy.

Crowdfunding companies create 1 new job for every $37,702 invested/donated.

For every $1 invested in Crowdfunding startups leads to $6.36 in revenue.

At this growth rate, Crowdfunding will contribute $500 billion in funding per year by 2020.

This $500 billion in funding will generate $3.2 trillion in economic value per year by

GoGetFunding hosts thousands of crowdfunding projects and has helped people from all over the world raise millions online

To help Crowdfunders understand the most successful tips to raise the most money online as possible with their Crowdfunding campaign, GoGetFunding did some of good ol’ fashioned number crunching to see what strategies worked best. They looked at 12,052 fundraising projects and millions of data points within Crowdfunding campaigns to see what really makes a difference when launching fundraising campaigns on Crowdfunding platforms. Here are the results in one of the best infographics we have seen to date:

Hiring an Experienced PR Firm with Strong Media Relations Experience and a Strong Database of Developed Crowdfunding Media Contacts Can Make or Break a Serious Crowdfunding Campaign Drive

Follow these simple tips to find the best Crowdfunding PR firm to help launch a successful Crowdfunding PR campaign for fundraising platforms, portals, websites and individual Crowdfunding campaigns:

Check to see how many years the PR firm has been in business and examine what industries they have served

Review their Crowdfunding activity on popular social media sites such as Linkedin.com, Twitter.com, etc. to see how knowledgeable they are on popular Crowdfunding news trends in the media

Make sure they include a wide variety of written press materials in their monthly retainer, such as a Crowdfunding campaign profile, at least four press releases for a 30-day campaign, a Frequently Asked Question (FAQ) sheet, a short white paper, online press room, and media training/message maps for executive interviews, etc.

Make sure that you will be working with a media relations expert that has at least 10+ years of media relations experience. The more media relations experience the better your publicity results will be.

Beware of PR firms that recommend signing up for expensive online tutorials, which then later pressures clients to buy more expensive PR services when they realize that they simply do not have enough time, experience or media skills to pitch stories to reporters successfully

Make sure the PR firm adheres a strict no conflict of interest policy meaning they do not represent two companies or Crowdfunding campaigns that would be considered competitors at the same time.

Ask for a PR publicity guarantee and a clip report that shows clients all the news stories that their Crowdfunding PR campaign generated

Ask the PR firm what other types of value-added marketing services are available such as press conferences, community outreach, email marketing, Google advertising/analytics, building fundraising donor databases, data mining, trade show speaker placement, product launches and perks fulfillment.

Last, but not least, make sure the PR firm is thinking long term with initial Crowdfunding PR campaign. This means they need to completely understand building brand share awareness as well as business distribution channels for your products and services.

It’s not easy being a green innnovator, but EnergySavings.com provided us with the nice infographic below to detail how creative people are using crowdfunding platforms to raise money to fund free green products and projects that are eco-friendly and help save or produce green energy.

As more and more people become concerned with the environment – some to the point of dedicating their lives to trying to come up with innovative solutions to the world’s problems. Unfortunately, many of these people with great ideas don’t necessarily have the means to bring their concepts to life – at least, until now.

Enter the the world wide crowd and the rise of crowdfunding websites. Now anyone with a great idea now has the ability and opportunity to promote it and even raise money!

EnergySavings.com spent some time combing through crowdfunding sites like Kickstarter.com and Indiegogo.com to find some examples of great people pursuing the greater good. Take a look!

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Please click here to help us Crowdfund this website’s editorial development

Founded in 2010, Crowdcube is the next generation of business investment in the United Kingdom. It is a new way to fund start-ups and business expansion by crowdfunding for equity, giving entrepreneurs a platform to connect with ordinary people and raise venture capital. By attracting lots of investors who invest smaller amounts of money into a person, company, product or idea you can bypass the traditional ways of raising venture finance.

Having founded, and worked for several entrepreneurial businesses Crowdcube’s founders understood how difficult it was to raise money in order to start and grow a small business. The task of securing investment is a notoriously perplexing and sometimes sluggish process that can be a struggle at the best of times. In today’s worldwide economic crisis this climate has become even more challenging.

Thus, Crowdcube now gives entrepreneurs the opportunity to take control of raising funding from their own network of friends, family, customers and strangers.

EquityNet unveiled a free Equity Crowdfunding Industry Research Report containing statistics and trends based on U.S. businesses that used EquityNet from 2007 to 2012 to seek equity-based crowdfunding from accredited Reg D investors.

Presented in the form of an embeddable infographic, the report presents some of the first statistics available on the original form of equity crowdfunding that involves the use of funding platforms such as EquityNet by accredited investors. It provides insight into how crowdfunding will appear under the deregulating provisions of the U.S. JOBS Act in which millions of non-accredited investors will be able to invest in privately-held businesses.

In introducing the report, Judd Hollas , EquityNet’s founder and CEO, said that the crowdfunding industry is hungry for “more data and less rhetoric.” “We are in the unique position of having 6 years of granular data from our patented platform and prepared this report to provide a statistical industry perspective for investors, entrepreneurs, policymakers, service providers, and others in the crowdfunding ecosystem. Although some high-level information has been available, the trends and statistics that emerge from this report present valuable new insights into the emerging crowdfunding industry.”

The new report contains business composition statistics and trends for many important attributes and even demonstrates the effects of the recession. For example, the average amount of capital being sought by entrepreneurs has varied greatly since EquityNet launched its platform in 2007. In 2008 the average capital sought was $2.5 million and dropped to an average of$800,000 by 2010. The economic downturn also left its mark on companies’ average pre-investment valuation, which fell from$6 million in 2008 down to nearly $3 million by 2010. Both of those metrics strengthened along with the economy by 2012.

Among other statistics presented and analyzed in the report are:

Consumer and business product/service companies account for over 40% of equity crowdfunding activity. These are industries that were previously underserved by traditional venture capital.

Around 50% of businesses that use equity crowdfunding seek less than $500,000 in investment capital.

Valuations vary widely in equity crowdfunding with around 40% of pre-money valuations being under $1,000,000.

Approximately 70% of businesses seeking equity crowdfunding had no revenue in the previous year, but 75% of those businesses expect to generate revenue in their current fiscal year, indicating that the majority are at the revenue-inflection point.

15% of businesses seeking funding are currently profitable, and 90% of the remainder predict that they will be profitable in 3 years or less.

30% of the businesses in the sample have patents or patent applications for proprietary technology.

Hollas noted that the sample analyzed for the report involved over 1,000 businesses and emphasized the significance to the industry of the first data-driven report based on 6 years of operation in the equity crowdfunding industry.

“We feel that these statistics provide the first-ever information that can be readily extrapolated to represent the entire crowdfunding industry. Our report contains 15 data-packed charts, graphs, and related commentary. We hope that entities in the crowdfunding ecosystem find our report helpful as we approach the anticipated early-2014 date for the SEC to finalize their regulation-making process that will give legs to the Title III of the JOBS Act of 2012.”

EquityNet prepared this crowdfunding report in response to the widespread interest in equity crowdfunding as provided in the Jumpstart Our Business Startups (JOBS) Act that President Obama signed into law in April 2012. The JOBS Act relaxes regulations on fundraising for privately-held businesses and gives online funding platforms like EquityNet more flexibility in facilitating that fundraising.

The crowdfunding provisions of the Act are getting the most attention because they will allow entrepreneurs to solicit the general public for investment, an activity that was previously prohibited. Proponents of the Act state that it will directly lead to more businesses starting and to increased employment – and that it will encourage business and technological innovation in the U.S.

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